Hi, I have received defective notice 139(9) with my FY 2017-18 ITR-3 from Income Tax department, can someone please help me to rectify errors? I have started small web development company in FY 2017-18 under proprietorship and hence I have used 14005 - Other IT Enables Services code under 44AD using presumptive taxation. FY 2016-17 I had filled ITR-4 under 44ADA using code 607 - Professionals (Others) because I was doing freelancing at that time. And this year I have registered as proprietorship and also had STCG, so I filled ITR-3 instead of ITR-4 But somehow I received defective notice with 2 errors as below: 1 => Error Code:311 Description: Taxpayer having income under the head "Profits and gains of Business or Profession" but has not filled Balance Sheet and Profit and Loss Account as required in explanation (f) under section 139(9) read with section 44AA 2=> Error Code:86 Description: As per section 44AD(6) of the income tax act, 1961, the provisions of Sec.44AD are not applicable to - (1) persons carrying on professions that are referred to in Sec.44AA(1), (2) persons earning income in the nature of commission or brokerage, and (3) persons carrying on any agency business. As seen from the return of income filed, the nature of business code mentioned is which falls in the categories mentioned above. Hence, the provisions of Sec. 44AD are not applicable, in your case. As the provisions of Section 44AD are not applicable,in your case, the claim of computing profits and gains of business on presumptive basis, under the special provision is not applicable. Hence, the above defect has to be corrected by way of computing the profits and gains of business under the normal taxpayers and not under Sec. 44AD and offering the same. My questions also include: 1. Is 14005 - Other IT Enables Services not part of 44AD? 2. I have declared Flipkart Affiliate TDS (I got affiliate coupon once only) in ITR, will this be the cause of defective notice? Can someone please help me to correct these errors, much appreciated! Thank you in advance.
Hi
1. You don't fall in the category of 44AD. You could have opted for 44ADA. 44ADA is applicable to professionals whereby 50% of the gross receipts is declared as income.
You need to revise the return in response to the notice of defect.
Also, select the No Accounts case while filing ITR.
2. That would not be an issue.
We may help you with the revision.
Dear Sir,
Hope you are doing well !!
1. You need to revise the return with correct code .
2.No. that would not be the cause of defective notice.
Thanks for your answers. 1. Do I need to file revise return under 139(5) or in response to 139(9) after changing 44AD to 44ADA? 2. Also, I want to ensure that 14005 eligible for 44ADA. Because in previous year ITR-4, I have initially selected 709 - IT Enabled Services, and I received defective notice at that time and I have to select 607 - Professionals (Others) to rectify it using 44ADA. So please confirm that 14005 will eligible for 44ADA for sure. 3. Re: no account case issue, I have already selected No account case while filling ITR-3, but I am not sure why it resulted error. I have filled 0 (zero) in sundry creditors/debtors, cash balance, inventory, will this be the cause they assumes as not filled the section? What to fill in that case. Thank you.
1. You need to file return in response to notice under section 139(9).
2. Yes, it falls under section 44ADA.
3. You should put some amount in cash in hand column.
Hi,
1. Revise return u/s 139(9).
2.Yes.
3. You can put some amount in cash balance column.
If you are filing return under presumptive section then why are you filing ITR 3 you should have selected ITR 4 and just filled the 8 column that are necessary under 44AD.
The code selected by you are appropriate I guess and it should not create any issue now.
You must file ITR in response to 139(9) and upload the XML again.
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Thank you
- Please file it under 44ADA and fill figures in cash balance.
